***************************** A Shortage As Soon As 2012 DOD: Joint Operating Command October 27, 2011
The
US Department of Defense’s Joint Operating Command said in its
biennial report that a world oil supply shortfall would pose a serious
challenge to military preparedness, he said in an e-mail to OGJ. “They
have said that as soon as 2012, total world oil production will begin
to decline, and that there could be a 10 million bbl/day shortage by
2015,” he indicated.
This was back when DOD was paying $126 / gallon for algae-produced aviation fuel.
*******************************
Flashback from our own DOE, March 7, 2020, link here:
This is so incredibly cool. I first posted the note in the screenshot
below on October 27, 2011, and then posted it again, with a tag to
follow-up in December, 2020. It's a bit early, but with WTI dropping
below $50/bbl, I thought this was as good a time as ever to post it
again.
Link here. The tag, follow-up in December, 2020, will remain.
"... as soon as 2012, total world oil production [would] begin to decline, and .... there could be a 10-million-bbl/day shortage by 2015."
Trans Mountain: complete, ready to flow, dot a few more "i's" and cross a few more "t's" and call it a day. Link here.
Evangeline Pass Expansion: Louisiana/Mississippi.
Affirmed by US Circuit Court of Appeals for the DC Circuit; unanimous three-judge panel in DC! Wow. Link here. Important case, had to do with emissions. KMI-backed project; will expand existing pipelines to feed more fuel to Venture Global's Plaquemines LNG export terminal in the Gulf of Mexico.
December 15, 2024: Plaquemines up and running. Link here.
After a roughly three-year wait for a critical state permit, Enbridge’s
Great Lakes Tunnel and Pipe Replacement project for its Line 5 pipeline
across the Straits of Mackinac in Michigan has taken a step forward. The
Army Corps of Engineers’ permits for the tunnel project would seem to
be the only major obstacle standing in the way of construction, but
there may well be more challenges ahead. Like a few other oil and gas
projects — namely, Mountain Valley Pipeline (MVP) and Dakota Access
Pipeline (DAPL) — Line 5 has become entangled in controversy, including
local opposition worried that a spill would irreparably damage their
surroundings and spoil the state’s natural resources. In today’s RBN
blog, we take a closer look at the Line 5 project, its next steps, and
the opposition it continues to encounter.
Wow, pat on the back. There are days that I think the blog is the best Bakken blog on the net. This is one of those days. Free, no ads, no subscriptions, no passwords.
*************************** Chattajack
Older daughter Kiri has been officially entered into the 2024 Chattajack paddleboarding race. I think it's the largest race of its kind in the US, maybe the world.
On-line application / registration "opened" at midnight, eastern daylight time, May 1, 2024 -- about nine hours ago. By 12:05 a.m. Kiri was registered. By 12:10 a.m. registration was closed; maximum number of participants had been reached. By 12:30 a.m., there were 136 on the "wait-list."
Note: in a long note like this there will be content and typographical errors. If this is important to you, go to the source.
A reader alerted me to the story. Thank you.
Elections have consequences: this would not be a story had Resident Biden not canceled the Keystone XL. But here we go again. Assuming Biden's regulators don't stop the merger, and assuming the merger goes through, there will be a "new pipeline" running from western Canada to the US gulf coast.
The "new pipeline" will be above ground and run on two rails.
new venture: USD Partners -- processes heavy oil with diluent and then loads it on rail tank cars;
the "pipeline" bisects the Twin Cities
could add as many as 15 to 20 oil trains through Minnesota each month
would begin as early as 3Q21
destination: Port Arthur, TX
I don't know where this stands with regard to approval by US regulators, but it seems it would be difficult to halt the deal when Resident Biden said his administration is looking for additional ways to move "energy" around the nation -- LOL -- in addition:
while remaining the smallest of six U.S. Class 1 railroads by revenue,
the combined company will be a much larger and more competitive network,
operating approximately 20,000 miles of rail, employing close to 20,000
people and generating total revenues of approximately $8.7 billion
based on 2020 actual revenues.
so we'll see
CP is already the largest rail shipper of oil in the state
volume varies considerably: anywhere from five to nineteen "hazardous" trains per month
but get this:The new oil trains running from USD's terminal aren't likely to be
tallied in those state counts. USD said the oil is not hazardous cargo
as defined under U.S. and Canadian transportation regulations.
folks can correct me but this is my understanding:
Houston-based USD Partners will process / load the diluent-bitumen at their facilities in Hardisty, east-central Alberta, Canada unto the CP-KCS railroad
the diluent - bitumen slurry is abbreviated to "dilbit" but DB Partners refers to this as DRUbit-by-rail (DBR)
the DRU facility in Hardisty is, apparently near completion, if not already completed
Folks will argue about this for quite some time, but one wonders whether DBR through the Twin Cities would even be an issue if the Keystone XL had not been canceled and had other pipelines not been delayed, deferred, or canceled (see Liberty Pipeline).
Texas: y'all might remember this story. Now it's being reported that Goldman Sachs will open a "Dallas campus, second largest after New York. Link here: https://www.foxbusiness.com/markets/goldman-to-open-dallas-campus-second-largest-after-ny-report. I think the Schwab campus just north of Ft Worth might be the biggest Schwab campus. Not sure. Back in 2019, JPMorgan announced it was moving some "assets" to the Dallas area. For list of companies relocating to Texas, see this post.
Ten-year treasury: after all that hand-wringing, the narrative seems to be changing. Apparently inflation fears are taking a back seat to long-term growth hurdles. It appears the Biden administration will unnecessarily extend the pandemic consequences by at least a year; the labor force may be the biggest hurdle for US economic growth. Maybe instead of a huge jump in GDP in 2Q21 and 3Q21, the economic recovery will remain robust and last two full years. Link here. Today's range: 1.450 - 1.484. Wow. Link here.
Western Canada’s Montney-sourced natural gas production has been on a
remarkable upward trajectory in the past decade. Most of this growth has
been focused in one province: British Columbia. However, that progress
has not come without difficulty.
A key challenge during BC’s gas boom
has been providing sufficient pipeline takeaway capacity — the hurdles
include the BC Montney’s remoteness, various regulatory impediments, and
the unique geologic nature of the play. For this amazing gas supply
growth story to continue well into the future, more pipeline capacity
needs to be constructed. In our concluding blog on the Montney, we
discuss recent pipeline developments and the challenges still ahead.
The article doesn't answer that question. In fact, the article hardly addresses that question.
Instead, the article is about global reserves in general. Data points:
current estimated global oil reserves: 1.7 trillion bbls
global demand, about 100 million bbls/day
doing the math: 45 years at current demand and no further addition to reserves
since 1980, we've extracted about 950 billion bbls -- let's call it a trillion bbls -- and during that period proven oil reserves have soared by over one trillion bbls
why peak-oil production is wrong: the US has had a reported oil supply lifetime ("reserves-to-production" of just 8 - 14 years reported every year since the end of WWII. This suggests we should have run out of oil many decades ago. Yes ,over 50 billion bbls and 12 million bbls/day, proven reserves and total crude oil production are the highest in US history
why peak-oil production is wrong: there is little economic incentive to look for resources that will not be needed for many decades
global shale and deepwater opportunities are overwhelmingly under-explored but will become more attractive as demand continues to mount
most people do not know that 60 - 70 percetn of a reservoir's OOIP remains stranded after primary and second operations because it is so difficult to extract
tertiary recovery -- CO2-EOR could be the next oil revolution in the US after shale
By the way, something to think about.
For decades oil companies have said CO2 is not an issue. Now they are changing their story. Sure, they are being forced into political correctness. But didn't this work out just great? All of a sudden CO2 will be needed for tertiary production.
At around 4.5 million barrels per day (MMbpd), Canada is the world’s
5th largest oil producer. Some 75 percent of Canada’s production occurs
in the western province of Alberta, having a massive deposit of heavier,
harder-to-produce “oil sands.”
Canada has a nearly unlimited hydrocarbon resource, so importing oil
nations around the world are increasingly seeking the country to supply
resources. Canada’s biggest advantage may be its widening capacity to
export. A slow growing population and mature energy demand market make
incremental domestic needs rather low.
Currently, most of Canada’s petroleum production is exported, and
almost all of that gets shipped south to the U.S. This overreliance on
the U.S. market has become a problem for Canada because a shale
revolution has meant surging U.S. oil production amid its flat demand.
As such, Canada needs to find new growing markets for its domestic oil
industry to flourish.
Canada’s natural goal is to reach Asia, responsible for about 70
percent of new oil demand in the world. Exporters are banking on cheaper
transport. It takes a little over a week for a ship to reach Tokyo Bay
from Vancouver, for instance, compared to nearly three weeks from the
U.S. Gulf Coast.
Canada, the world's fourth-largest producer of crude oil, missed out on a recent global recovery in energy prices, and is now taking it on the chin as prices fall.
Crude prices in Canada briefly dropped below $16 a barrel on Friday, after a U.S. federal judge blocked construction of a key pipeline needed to transport oil from Alberta to Nebraska.
That means Canadian crude is going for a fraction of supplies elsewhere, even as U.S. prices have tumbled 21% from last month's highs to about $60 a barrel . In October, Canadian crude traded at its largest-ever discount to U.S. oil of more than $51.
Because of the steep discount, Canadian producers are leaving 40 million Canadian dollars, or $30.65 million, a day on the table. Energy accounts for nearly 11% of the country's nominal GDP, according to government figures.
The Canadian market was dealt a fresh blow Thursday, when a federal judge ruled that TransCanada Corp. couldn't advance its Keystone XL pipeline without a supplemental environmental review. Completed, the pipeline would carry up to 830,000 barrels a day to Nebraska, where it could then be carried to the Gulf Coast.
Canadian heavy crude prices have traded at an average discount to
West Texas Intermediate future of almost $22 a barrel this year, about
70 percent bigger than the average discount last year, after existing
pipelines filled to capacity amid a surge of new production from Suncor
Energy Inc.’s Fort Hills oil sands mine.
The discount widened 50 cents
to $24 a barrel on Wednesday.
Back-of-the-envelope: Canada exports in excess of 4 million bbls of oil to the US every day. 4 million bbls/day x $24/bbl = in round numbers, $100 million each day is what Canada is losing -- just on exports to America because they can't get the pipelines built. $100 million / day = $3,000 million / month?
Disclaimer: I often make simple arithmetic errors.
Kinder Morgan’s Trans Mountain Expansion is the largest, and one of the
very few, pipeline projects that has a chance of reaching completion.
Alberta’s oil sands producers have been desperate for new outlets to
take their oil out of the country, and the decade-plus Keystone XL saga
is the perfect illustration of the industry’s woes.
Keystone XL is still facing an uncertain future, and with several other
major oil pipeline projects already shelved, there has been extra
emphasis on the successful outcome of the Trans Mountain Expansion. That
is exactly why Canada’s federal government, including Prime Minister
Justin Trudeau, has gone to bat for the project.
The pipeline is "crucial to the entire Canadian oil sands industry [and oil from WCS is already selling at a $30-discount to WTI]-
And,
Kinder Morgan just said it was suspending all work on the pipeline; and,
Canada's Prime Minister Trudeau just left for a trip to Peru [I have no idea why]
Yeah, it's a disaster. Original Post
Notley to Horgan: read my lips!
Alberta calls out BC after pipeline expansion suspension
For those looking for something different than what's coming out of Washington, DC, this is a worthy alternative.
********************************
An Opinion
- from a reader, from an un-sourced document -
posted: April 11, 2018
Bottom Line: PM Trudeau has a problem.
The news is full of the “Alberta/BC war."
The Vancouver Sun and
the local radio station covers the situation inside and out.
The Prime
Minister declared, “the pipeline will go through” and then he left on a
trip to Peru.
[A] trial was held in Vancouver for fourpeople who
ignored the court order to not go near the Kinder Morgan site.
One of
the people is an NDP MP.
Remember that the election was so close that
the NDP had to get three Green Party members to join them in order to form
the government.
If they put [this individual] in jail, the NDP government cannot pass any
bills because if they introduce one and don’t get a majority vote, the
government will fall.
So we’re waiting to see what the sentence will
be.
One of the four people was Elizabeth May who is an MP in the federal
government Green Party member.
The Liberals have a good majority so
nobody cares how long she sits in jail.
The population seems split
between those who want the pipeline and those who don’t.
Those who
don’t [want the pipeline] have willing protesters and contributors.
Those who do [want the pipeline] are yelling
for the federal government to take action.
The crude oil coming
through the pipeline goes straight into ships headed to Asia, mainly
China.
More pipelines, more crude going to China.
It has nothing to do
with oil or gas supply to BC.
It increases the possibility of tanker
accidents and oil spills that affect our beaches and fish and sea life,
etc.
It will bring profit to Alberta and money from taxes to the federal
government.
A lot of the people wanting it to go ahead think it will
supply a lot of jobs. Right now nobody needs a job.
Everyone is already
working because the construction is booming.
There are signs on every
store door “now hiring."
The only jobs will be while the pipeline is
being built.
BC’s major industry is tourism.
All those involved in
tourism are against the pipelines, fearing oil spills will affect the
beaches and sport fishing and whale watching, etc.
People inland don’t
care unless they are interested in the environment and disapprove of the
tar sands and understand the volume of carbon output by an additional
4or 5 tankers a day going out of the harbour.
I
don’t know which side will win. Obviously Justin Trudeau doesn’t know
either. He’s gone to Peru and hopes it will get solved while he’s away.
On Thursday, Western Canadian Select
was trading at a discount of US$27 a barrel to WTI. The discount
widened to the biggest level, US$30.55 a barrel, in four years on
February 5, after a selloff following the temporary shutdown of Keystone
in mid-November.
...as additional storage capacity in Alberta and data about lower
crude-by-rail shipments added concerns over the domestic oil glut, as
TransCanada’s Keystone Pipeline has yet to return to normal pressure
levels following a leak and temporary shutdown last November.
Global warming causing much of the trouble:
This week, market participants were digesting news about increased
storage capacity and January crude-by-rail data. Crude-by-rail exports
out of Canada fell by 11.3 percent month on month in January to 140,959
bpd, according to the latest data by Canada’s Crude Oil Logistics
Committee, quoted by Platts. Analysts had expected rail crude exports to
be either flat or down, because Canadian rail operators and customers
had reported delays in shipments due to extreme weather.
And new storage comes on-line early:
In addition, Kinder Morgan Canada and Canadian midstream operator Keyera said
earlier this week that they added two additional tanks at the Base Line
Terminal for service ahead of schedule. The two tanks add an additional
800,000 barrels of crude storage to the 1.6 million barrels currently
in operation.
Much more at the link.
It goes without saying that the Keystone XL was a huge deal for Canada.
It's hard to imagine oil in North America selling for about $30/bbl. For Canada, something has to give. I can't imagine many producers able to stay afloat selling crude oil for $30/bbl.
I"ll get back to the Bakken, energy, and market in a few minutes, but let's start with this screen shot:
Okay, back to the Bakken, energy, and markets.
Disclaimer: Again, remember:
this is not an investment site. Do not make any investment, financial,
job, travel, or relationship-related decisions based on anything you
read here or think you may have read here or anything that you were told
by someone who said they read something on this site.
Wow, today has been so busy, all I can do, is link the article and then perhaps come back to it later.
Baker Hughes said Wednesday that it narrowed its fourth quarter loss to
$29 million from $104 million in the third quarter -- its first three
months as a merged company.
Baker Hughes revenues, however, fell shy of the $5.9 billion generated
by Halliburton as the Houston rivals compete to be world's second
largest energy services company after Schulmberger, which has one of its
four principal offices in Houston.
These guys are nuts: over at Bloomberg, the "dark side of American rise to oil superpower." I can only assume that Javier Blas is a pseudonym for Andrew Ross Sorkin. Even Andrew Ross Sorkin (who has probably named his first son Andrew Ross Sorkin II) wouldn't want to be associated with this article. One almost wonders if we will see it re-printed in The Economist.
How's the blog doing? Glad you asked:
Buckeled. From The Financial Post, Canadian oil prices buckle after railway refuses to be "swing shipper." Premier (don't you just love the word, "premier" -- slightly higher in the pecking order than "president" -- wasn't Mr Krushchev the "premier of the USSR? -- but I digress -- does anyone under the age of 25 know his first name -- no, it was not Putin) Trudeau is in deep trouble. His lackadaisical attitude toward his country's energy sector (about the only think the country has going for it, except recently opened borders) has resulted in CAVE dwellers stopping economic progress:
With new pipelines at least three years away, transportation capacity is so tight in Canada’s oil industry that every twitch in the system appears to be blowing out the discount.
World oil prices are recovering, but Western Canadian oil prices are
falling back to depressed conditions, the result of transportation
capacity so tight every twitch in the system appears to be blowing out
the discount.
Western Canadian Select (WSC), the Canadian
benchmark, was changing hands for $33.57 a barrel Tuesday, after losing
about $8 in two days, while West Texas Intermediate (WTI) was trading
for US$64.75, up US$1.35 over the same period.
The latest scare to push down Canadian oil prices came from Canadian
Pacific Railway Ltd. late last week, which said it has no interest in
carrying big quantities of Western Canadian oil while producers wait for
pipelines to get built.
“We understand crude is only going to be
here for a limited period of time,” CP Rail CEO Keith Creel said to
analysts in a conference call Thursday to discuss fourth quarter
results. “We are looking for strategic partners with long-term
objectives that allows us to have a more stable book of business.”
The
railway expects its crude volumes to increase this year, to 60,000
carloads from 48,000 in 2017, but Creel said space would go to those who
“appreciate that capacity” and CP will not allow itself to be
“commoditized.”
We've talked about this so often
I'm not going to say anything else. For now. Except to say this: very
cheap heavy oil from Canada is going to replace heavy oil from Venezuela
for US refineries optimized for heavy oil.
Buckeled. Tesla ... from CNBC/SeekingAlpha -- let's just put a bunch of phrases together and see if you can put together a coherent story. It shouldn't be too difficult:
Model 3
delays
worsen
shares fall 2%
when does SEC get involved?
Nevada gigafactory problems worse than "owner" previously owned up to
factory resorting to having some batteries made by hand
comments suggest that this is a fake CNBC news story
employees also said that quality control workers were not experienced,
and two said that some batteries are leaving the factory with a
potentially serious defect, a claim that Tesla vigorously denies.
other comments, probably not accurate
looking at bringing in donkeys from Mexico to help move raw components to where they are needed (probably not accurate; easier to bring in day laborers)
borrowing scores of workers from suppliers to assist with manual assembly (okay, that's probably accurate)
the comments are the best part of this story, or should we say, debacle
gigafactory..gigglefactory...bespoke factory
prospective owners can order hand-made batteries lined with custom redwood and leather packagine
Oil companies are on track to produce a record 10 million barrels of
American crude a day, a milestone that could be reached as soon as
February largely due to another record that is expected to fall in
coming months.
By the end of the year, fracking intensity is projected to
exceed levels reached in 2014 - the height of the so-called shale
revolution - as hydraulic fracturing operations use more sand, more
water and more pumping horsepower than ever before to free oil and gas
from shale rock.
The result: U.S. crude production should reach an
all-time high with just half the number of drilling rigs used at the
peak of the last energy boom.
Welcome to the year of the fracker. The controversial
technology that transformed the U.S. energy industry and reshaped global
oil markets has advanced to a new level, becoming more science than art
as fracking operations run round the clock, target ever smaller
sections of wells with greater precision and greater force, and squeeze
more oil out of every well.
"It never stops," said David Adams, senior vice president for
completions and production for Halliburton of Houston. "We're pushing
the limits."
December 17, 2017: a reader sent the original post to a friend in Canada. The Canadian reader disagreed with me, saying that Justin Trudeau was in favor of "the Canadian oil sands pipeline." The reader had not heard of George Butts, but this would be like Hillary, had she been elected president, making Tom Steyer her "principal advisor." And this is the problem with folks who are unaware of the persistence of socialists: they are "taken in" by smooth talkers but are unaware of the inner circle advising their elected leaders.
Justin Trudeau can be "for anything he wants to be," depending upon which audience he is addressing, but it doesn't take a rocket scientist to know where his allegiances lie, see clip below.
Unfortunately this is a long clip but skip ahead to 2:05 to hear George Butts in his own words:
Confused About Canada's Energy Policy?
It will be interesting to see how "Canada" and Justin Trudeau respond to $30-oil.
Original Post
A reader sent me a note regarding Canada's Justin Trudeau's principal advisor: George Butts. This is what would have happened to us had Hillary been elected. George Butts is Tom Steyer on steroids. George Butts doesn't have the money but he has the power. He is Trudeau's principal advisor on energy (and I assume most everything else). Prior to his current "job," he was president and CEO of the World Wildlife Fund Canada, a global conservation organization. In 2014, Maclean's magazine declared Butts to be the fourteenth most powerful Canadian.
I didn't think that article was of particular interest -- to me it was just another political debacle for the Canadians. So I did not post it and had no plans to post it. Then something else just popped up -- again, another article from a reader, which we will look at farther below, but first:
This is not a rhetorical question. I am truly curious. US refineries are optimized for heavy oil; that's what the Keystone XL pipeline was all about -- bringing heavy oil from western Canada to US refineries along the Gulf coast. Of course that has not panned out.
oil from Canada's oil sands is now selling at $27/bbl discount relative to WTI -- the sharpest difference in more than four years
Western Canada Select (WCS): benchmark for oil from Alberta's oil sands, has plunged in December, falling to just $30 per barrel at the end of this past week
reflects:
different quality from lighter forms of oil
extra transportation costs to move oil hundreds of miles out of Alberta
but a discount is usually something like $10/bbl; not more than $25
a price deterioration of this magnitude has not been seen in years
reasons for increased transportation costs: CBR is imploding; perfect storm
TransCanada's Keystone pipeline capacity was slowed in November while the company made repairs
led to a glut of WCS; WCS was diverted into storage as the pipeline underwent repairs
second, railroad companies were unable to accommodate the oil industry on short notice; equipment constraints and crew constraints (one wonders if such constraints are worse in a liberal-leaning/regulation-heavy country like Canada vis-a-vis the US)
Canadian oil companies have been tied up trying to ship delayed oil cargoes; have not been able to accept oil shipments
Much more at the linked article.
My hunch: Justin Trudeau is receiving a lot of angry phone calls from Alberta but George Butts is more than happy with how things are turning out. Butts leads the "keep-fossil-fuel-in-the-ground" parade.
As a lead-in to this next post, I was looking for a "Canadian song." Funny how things turn out. I did not know this. Judy Collins' most famous song (?) Some Day Soon was written by Ian Tyson -- one half of the Canadian duo Ian and Sylvia.
Someday Soon, Judy Collins
*****************************
I posted another note about this very same story just a few days ago. But that was before XOM wrote of its entire western Canadian investment. Wow, wow, wow. From Bloomberg: Canada's Fading Oil Promise Leaves US Majors Struggling.
Oil-sands investments in Western Canada that gobbled tens of billions
of dollars over the past decade are proving an Achilles heel for some
of the world’s biggest energy producers.
Exxon Mobil Corp. slashed proved reserves the most in its modern
history after removing the entire $16 billion, 3.5-billion-barrel Kearl
oil-sands project from its books on Wednesday.
That followed
ConocoPhillips’ announcement a day earlier that erased 1.15 billion
oil-sands barrels, plunging its reserves to a 15-year low.
While prolific shale plays in Texas and Oklahoma are going through an
investment boom with oil above $50 a barrel, the oil sands have fallen
out of favor. Current investments in the region amount mostly to
long-planned expansions by large Canadian producers like Suncor Energy
Inc., while majors like Statoil ASA have sold assets. Suncor, which took
over Canadian Oil Sands Ltd. less than a year ago, is down more than 3
percent this year in Toronto.
The oil-sands operations in northern Alberta are among the costliest
types of petroleum projects to develop because the raw bitumen extracted
from the region must be processed and converted to a thick, synthetic
crude oil.
In addition, Canadian crude sells for less than benchmark
U.S. crude because of the added cost to ship it to American refineries
and an abundance of competing supplies from shale fields. That’s why the
oil sands have been particularly hard hit by the worst oil slump in a
generation.
The combined 4.65 billion barrels of oil-sands crude removed from
Exxon’s and Conoco’s books are worth $183 billion, based on current
prices for the Western Canada Select benchmark. The revisions hit as
both U.S. companies, along with the rest of the oil industry, strove to
recover from a 2 1/2-year market slump that collapsed cash flows, wiped
out hundreds of thousands of jobs and prompted many explorers to cancel
their most ambitious drilling programs.
Much, much more at the link.
Of course, now that production is dropping -- and dropping precipitously -- in western Canada, "peak theorists" will tell us that, yes, indeed, another sign of peak oil, as oil production is falling, just as predicted by M. King Hubbert predicted.
September 2, 2016: from The Vancouver Sun -- November 14, 2015 -- not sure why this article came out this date, and the OGJ story below came out so much later.
Enbridge’s proposed Northern Gateway plan is, at least for now, dead
in the water after Prime Minister Justin Trudeau released a letter of
instruction Friday telling his transport minister to ban oil tanker
traffic on British Columbia’s north coast.
A ban would prevent
hundreds of tankers each year from carrying diluted bitumen extracted
from Alberta’s oilsands and piped to northern B.C. from being shipped
for export overseas.
“It will mean that Northern Gateway will
never happen,” said Gerald Graham, a Victoria consultant specializing in
oil spills for more than 40 years.
Canadian Prime Minister Justin Trudeau appears ready to fulfill a campaign promise to ban crude oil tankers off northern British Columbia in a move that would throw the proposed Northern Gateway Pipeline into question.
The $6.5 billion, 1,177-km twin pipeline proposed by Enbridge Corp. would carry blended bitumen from Alberta to a terminal at Kitimat, BC, and return diluent to Alberta.
TransCanada also has proposed a project called Energy East, which would link the oil sands with eastern Canadian provinces and the Atlantic.
This pretty much indicates the direction Barack Trudeau will take with regard to Canada's oil and gas industry.
*************************
McDonald's
I can't recall if I've blogged about McDonald's -- whether I have or not, I'm not going to cover that ground again. Suffice it to say, their coffee is good and at 50 cents for a senior cup, the price is perfect.
What's important are the comments at the linked site. A common theme is the poor service, the condition of their restaurants, and the fact that most employees speak two languages, neither of which is English. There are some exceptions in the local area, but overall as I travel across the US, I am very unimpressed with their employees. And that's their problem. People go there as a last resort. I go there because I'm guaranteed 50-cent coffee and wi-fi.
London-based BP has begun exporting ultralight crude oil, called condensate, from the Houston Ship Channel.
While exporting crude oil remains illegal, the federal government has begun to allow more leeway
for exporting lightly processed condensate produced from Texas' Eagle
Ford Shale, even though exact clarity on what is allowed is somewhat
lacking.
Oil sands cash flows will fall by $23 billion in the next two years,
energy consultancy Wood Mackenzie said in a report on Tuesday, as low
global petroleum prices make it less economical to extract bitumen from
northern Alberta.
Canada's oil sands hold the world's third-largest
proven crude reserves after Saudi Arabia and Venezuela, but operating
costs are among the highest globally, according to Wood Mackenzie
principal analyst Callan McMahon.
Current operating costs reach $37 per barrel for
thermal projects, in which steam is pumped underground to liquefy tarry
bitumen so it can flow, and $40 per barrel for mining projects.
With benchmark U.S. crude trading around $50 a
barrel, down from more than $100 in June, McMahon said the oil sands
region's cash flows would drop by $23 billion in 2015 and 2016 combined.
Producers including Suncor Energy Inc, Cenovus
Energy Inc and MEG Energy have slashed 2015 capital expenditures in
response to the oil price slump.
Something strange happened two years ago at Switzerland's annual
caucus of ultra-luxury car makers. Rolls-Royce, a brand dedicated to the
driven, not the driver, unveiled a vehicle that had just two doors, an
engine the size of a small Jacuzzi, and a transmission that pinged
satellites in order to adjust to the road ahead. The Wraith, as it was
called, had no space for a jar of Grey Poupon.
“We’re evolving,” says Eric Shepherd, president of Rolls-Royce North
America, about the shift into a sportier model. “Take a 22-year-old guy
who just sold his app company for $22 million. When he gets behind the
wheel of a Wraith, he’s hooked.”
Things have grown ever more strange for the one percent on four wheels.
The fancy cars seem to be multiplying and taking unexpected shapes.
Bentley moved to build an sport utility vehicle in 2013, a decision matched by Rolls
last week.
Ferrari has brought out a 963-horsepower supercar with an
electric motor, which has since been joined by an $840,000 Porsche with
two electric motors. Orders and eager deposits started have been pouring
in.
By the way, this makes the Tesla problems all the more interesting: there are no shortage of multimillionaires and billionaires ready and willing to buy expensive cars -- but apparently not Teslas. One almost gets the feeling that Tesla couldn't be at a worse price point: too expensive for most of us, but not expensive enough for the top one percent.
Once the weather improves and I start biking again, I'm going to look for some Ferrari / Porsche re-charging stations here in DFW metroplex. LOL.
**************************
Statue of Liberty Probably Won't Go Underwater This Year -- Or Ever, Despite National Geographic Cover
Yet another bitterly cold, snowy winter is destroying alarmist global
warming claims, proving once again that over-the-top global warming
predictions are proving no more scientifically credible than snake oil.
This morning, stunning photos show New England lobster boats frozen in port,
looking like they are stranded deep within the Arctic Circle. The boats
have been frozen in place for weeks, which would be remarkable enough
if this were the middle of January. However, the calendar is about to
turn to March.
Connecticut is experiencing its coldest February in recorded history. So is Michigan. So is Toronto. Cleveland and Chicago are experiencing their second coldest February in recorded history. Frigid and record cold temperatures are being set from Key West to International Falls.
At the same time, blizzard after blizzard is burying much of the nation
with record winter snow totals, with winter snowfall records beings set
from Boston to Denver.
The Kennedy children and grandchildren are seeing more snow than ever this year:
Many global warming activists are still attempting to defend the
discredited IPCC prediction, claiming a single winter does not
invalidate a long-term trend. The problem with such an assertion is that
last winter was exceptionally cold and snowy, too. And winters
nationwide have been getting colder for the past 20 years.
Objective scientific data show winters have been getting colder and
colder throughout the United States for the past two decades. When
global warming alarmists claim winters will become warmer and free of
snow, yet their predictions are proven false for 20 years in a row, at
some point logical people come to realize that global warming alarmists
are selling snake oil.
Another global warming activist tactic is to argue that global
warming actually causes more snow. Of course, this is exactly the
opposite of what they used to claim, as shown in the IPCC prediction.
Moreover, real-world scientific data prove their new claims false.
Global warming activists argue that warmer air can hold more moisture,
so winter snow storms that used to bring 12 inches of snow now bring 14
inches of snow. The problem with this new assertion is – as documented
above – winter temperatures are substantially colder now than they used
to be. Global warming activists cannot claim recent record snowfalls are
caused by warmer winters when winters are in fact much colder than they
used to be.
Later, 7:16 p.m. central time: how coincidental. In the original post below, The WSJ noted that "western Canadian oil fetches about $85." I was reading the most recent issue of Bloomberg Businessweek, p. 16: "As rail activity has ramped up and demand for Alberta's heavy crude has increased, so has its price, jumping from about $50 a barrel in November to more than $85."
French oil major Total is getting out of the sandbox. The toys are just too expensive.
The company is putting its Joslyn oil-sands project in Canada on indefinite hold. BMO Capital Markets estimates the project's cost at north of $90 a barrel.
Right now, Western Canadian oil fetches about $85.
Total's move is part of a broader shift. Some 450,000 barrels a day of potential output has been deferred this year, according to Sanford C. Bernstein.
Western oil majors are doing what the stock market wants. Having seen returns on capital slump, investors want more payouts and less spending.
And then this:
But Big Oil's retreat also comes when all the excitement, with stock-price multiples to match, is around smaller competitors pioneering shale development.
Their output, particularly in North America, has helped keep oil prices stable despite geopolitical shocks elsewhere.
The question is whether the smaller exploration and production companies can keep doing this.
If so, the majors' curtailed production may not boost oil prices as much as could be expected. They might simply lose market share to more innovative minnows instead.
Suncor Energy Inc. and Valero Energy
Corp. are poised to use only North American crude in eastern
Canada by 2015, helping to displace overseas imports.
Suncor’s Montreal refinery will reach that point in 2015
and Valero’s Quebec City plant by the end of this year, the
companies said April 29. Imports to Quebec, Ontario and Atlantic
provinces from outside North America dropped by more than 50
percent in November from a year earlier.
Enbridge Inc. plans to
start a pipeline late this year allowing oil to flow to Montreal
from fields in North Dakota and Alberta, further reducing
higher-priced supplies from Europe and Africa.
U.S. crude production reached a 26-year high in April,
increasing stockpiles in the U.S. to the highest since 1931,
while Canadian output is forecast to rise 4.1 percent this year.
A shift of oil to eastern Canada, coupled with future potential
to export crude, could help alleviate the glut and bring
domestic prices to an “equilibrium” with international levels,
said Tom Finlon, director of Energy Analytics Group Ltd.
"Within a very short period of time, there won’t be any
barrels coming into eastern Canada from overseas,” John Auers,
senior vice president of Tuner, Mason & Co., an industry
consultant in Dallas, said by phone April 30. “Those shipments
will be completely displaced by North American crude.”
Since the beginning of 2011, U.S. benchmark West Texas
Intermediate crude has averaged $14.02 a barrel less than Brent
oil, the international marker, after being at parity over the
previous four years. The WTI-Brent spread was $8.34 yesterday,
based on settlement prices.
Couple this with the news coming out of Saudi today (reported earlier) and things start to get interesting.
*****************************
[Update: a reader reminded me that OXY USA already announced it is moving from Los Angeles to Houston. I probably posted that once upon a time and forgot. I'm not going to take the time to change the post below -- for now. Just note that OXY USA is moving to Houston.]
Maybe this is why OXY USA hasn't left North Dakota yet. The tea leaves some months ago suggested OXY USA was going to leave the Bakken, but OXY USA is as active as ever in the Bakken. Either they have long term plans in the Bakken, or they are continuing to "stage" their Bakken assets for a future sale.
With this story, one thinks there may be a reason for OXY USA to stay in the Bakken. Bloomberg is reporting:
Occidental Petroleum Corp. Chief
Executive Officer Steve Chazen said the company’s California
spinoff will have plenty of places to drill that won’t be
hindered by a growing anti-fracking movement in the state.
The new company, which will be spun off to shareholders as
California Resources Corp. by year end, won’t drill in
communities that oppose oil and gas activity or hydraulic
fracturing, known as fracking, Chazen said in a call with
investors today. Occidental can avoid communities such as
Beverly Hills, which have passed limits on fracking, he said.
“To the extent that towns don’t want us there, we won’t be
there,” Chazen said, noting that some communities that oppose
drilling have high unemployment rates. “Maybe the people in
Beverly Hills should park their Rolls Royces and ride bicycles
going forward. You can see why I’m not going to be part of the
California company.”
Management of the new company will be named in the third
quarter. Chazen has said he’ll remain as CEO of Occidental.
OXY USA's corporate headquarters are located on Wilshire Avenue, Los Angeles, California. My hunch is that once the spin-off is complete, OXY USA will move its headquarters to its offices in Dallas. By the way, if that happens, I opined on that a long, long time ago, that it was just a matter of time before OXY USA leaves California. Remember: the three big plays in the US right now -- the Permian, the Eagle Ford, and the Bakken.
Europe’s oil giant Royal Dutch Shell plc has received approval from the Canadian government to expand its
Jackpine oil sands project in northern Alberta. The expansion is
expected to increase production in the region by around 100,000 barrels a
day (Bbl/d) to 300,000 Bbl/d.
The regulatory application for
the project was filed in 2007 and includes sanction for additional
mining areas and related processing facilities, utilities and
infrastructure.
The project had faced opposition from several
environmentalists on grounds of adverse environmental effects. However,
the Canadian government gave the green signal to Shell stating that the
resulting effects are justified.
Two story lines:
someone must find the Canadian oil sands profitable
the Canadian government listens to environmentalists and proceeds appropriately
The real value of the Keystone XL is that it would deliver oil-sands
crude down to the Gulf Coast, where it could compete with Mexican crude
priced against the Maya benchmark. Heavy Mexican oil enjoys a $20
premium over its Canadian rival and is trading at about $87 a barrel.
Even if the Keystone XL gets approved, just getting Canada’s crude down
to the Gulf is barely enough to make it worthwhile. Mark Lewis, one of
the new Keystone report’s co-authors, estimates that between the
transport costs and the extra lubricants needed to coax the oil through
thousands of miles of pipeline, it would cost about $18 a barrel to get
that tar-sand crude from Western Canada down to the Gulf Coast on the
Keystone XL.
Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.
Remember two facts:
the earth is not making any new oil (for all practical purposes, in human-time-span)
